Iran warns of natural gas shortages

Tehran, October 2, 2013

Iran faces serious gas shortages over the next two years because its giant South Pars field has not been developed quickly enough and domestic demand has grown, oil ministry news service Shana reported the country's oil minister as saying.

Iran sits on the world's largest known gas reserves, according to estimates by BP, and has signed several agreements to export large volumes to other countries, most recently Oman.

Energy officials serving under the previous government often boasted that rising production from South Pars, part of the world's largest gas field, would make Iran a top exporter soon.

Iranian media reported minister Bijan Zanganeh saying gas could start flowing to Oman in under two years when he signed the latest supply deal at the end of August.

But analysts have questioned whether Iran can extract enough gas to meet existing supply deals as long as Western sanctions that have hobbled energy projects remain in place.

Zanganeh now says Iran is likely to produce about 30 billion cubic metres (bcm) less gas than it will need this year, equal to forcing it to use costly and contaminating oil products to fuel power stations.

"Even though we import 40 million cubic metres a day of gas from Turkmenistan we still face shortage and we have to consume oil products in power plants," Shana quoted him as saying.

"This figure is catastrophic due to their impacts on the environment by polluting the air."

Iran exports some gas to Turkey but relies on flows from Turkmenistan, especially in winter, due to rapidly rising internal demand and slow progress on developing its gas projects due to Western sanctions over its disputed nuclear programme.

According to the latest estimates by BP, Iran consumed around 156 bcm of gas in 2012, making it the third largest consumer behind the United States and Russia.-Reuters